Today, even more from the National Conference of State Legislators. Not exactly the first place you'd turn for good articles on sports business, but the deputy editor of Politifact wrote a fiscal paper designed for state lawmakers to make wiser choices on stadium subsidies.
His 10 tips are really, really smart. Here's a few excerpts:
And, as a bonus, University of Chicago economist Don Coursey included a list of questions for journalists (or elected officials) covering economic development projects!
4. Choose the neighborhood carefully.Where geography is concerned, “downtown stadiums are almost always winners, even when home to terrible teams,” says Arthur C. Nelson, director of the Metropolitan Research Center at the University of Utah. “The farther away from downtown you get, the greater the likelihood of local economic failure, even if the team does well,” he says.
Typically, these reports offer projections that are hard to prove and easy to skew toward the rosiest of outlooks. This, combined with the propensity for stadium projects to experience cost overruns, suggests that it’s always worth taking consultants’ projections with a big grain of salt.
As the saying goes, cautions Allen Sanderson, a University of Chicago economist, “Never ask a barber if you need a haircut.”
And avoid getting sucked into bidding wars at all costs, warns Pakko of the University of Arkansas-Little Rock. They rarely produce any winners. “Sports franchises have monopoly power,” he says. “There are a limited number of teams, so cities are asked to bid against one another, whether or not having a local team is economically viable.”
Now, if we could only get elected officials to pay attention to articles like this...
- Why does this project require public funds?
- Why can’t it be completed using private funds?
- Who will construct the project? Who will operate the project? Will these groups of professionals, laborers and managers come from the local population? Will the majority of their earnings stay within the local economy?
- What assumptions are you making about the spectrum of users of your project?
- How much revenue will be new injections into the economy, as opposed to simple, zero-sum movements of money within the economy?
- How much of a primary draw will your project generate? If the project is just one of the many things that people might use or visit within a region, how are you accounting for this in your measurement of visitor revenue for your project?
- How much economic activity will the project promote indirectly? Who computed the “multiplier”—the amount of additional projected economic activity from every dollar spent directly on the project in question?
- Why is your project the best use of public funds? How does the impact of your study compare to alternative uses of the same funds?
- How do you expect the economy to be affected if the project is not funded and built?
- How will you address whether the project has met the community’s and your goals? Have funds been set aside to support a subsequent analysis of its actual impact?